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Element of Contract Bargaining
Offer and Acceptance in Contracts
Notvation and Assignment Contracts
Ratification to Unauthorised Contract
Contracts Relating to Employment Business
Contracts Promoting Immorality
Licences for Ready Made Software
Anticipatory Breach of Contract
Evidence Required to Show Breach of Contract
Duress and Undue Influence in Contracts
Contract Containing False Statements
The basis of the formation of every contract is its terms. Those could in turn be express or implied, depending on the way they become incorporated into the contract. Further, such may be necessary for the business efficacy of the contract or governing peripheral issues.
Performance that falls short of what has been agreed in the terms of the contract will constitute a breach of a term, which is often referred to as breach of contract.
The consequences of a breach depend upon the essence of the term broken. For those purposes there are two distinguishable types of terms- conditions and warranties. Conditions are terms that go to the essence of the contract. Therefore, they are so substantial in the context of the full contract, that a non-performance may fairly be considered by the other party as a failure to perform the contract at all.
Warranties are also obligations that must be performed. However, such are not so crucial that a failure to comply with those goes to the substance of the contract.
The concepts of conditions and warranties are not strict. Where a term is to fit under those two headings could vary from contract to contract depending on its context. Therefore, under which category a term will be classified is a matter of construction.
When dealing with breaches it is important to determine which type of term is to be dealt with as different remedies are available depending on the type in question.
If the term broken is a condition of the contract, the innocent party has the right to rescind the contract. Rescission means that the party has the right to treat himself as discharged from the obligation to tender future performance and further to claim to recover any damages he may have suffered as a result of the breach.
On the other hand, if the term broken is a warranty, the innocent party has only one available remedy and that is to claim for damages that were caused as a result of the breach.
The amount of damages is to be determined in the context of the case as a whole and taking particular regard to other terms of the contract. Therefore, despite the fact that performance of the contract might not be required since the innocent party have chosen to rescind, some of the terms of the original agreement may still be binding. In particular, examples of those terms are exclusion and limitation clauses which only come to effect in case of a breach of a term of the contract.
The general rule at common law in respect of the damages for breach is that the damages awarded aim to place the innocent party in the same situation, had the contract been performed according to the original terms. A claim for more than nominal damages will always be subject to the ordinary rules of remoteness, mitigation and penalties.
In certain circumstances damages could be an inadequate remedy for a breach. In such cases an application may be made for an equitable remedy to be granted. However, those are discretionary remedies and in practice are hard to obtain.
For example, an innocent party may apply for a specific performance, in effect requiring the other party to perform under the contract or act in a certain way. On the other hand, injunctions may be granted to restrain from breach of contract.
In other specific contracts, special remedies may be awarded including rights in lieu and resale in contracts for the sale of goods. Furthermore, a breach of contract will generally provide the innocent party with a specific remedy of a right of action against any surety.
If a breach has occurred in the course of performance before all the obligations under the contract have been discharged, the defaulting party could communicate such to the other side. If following the receipt of such information the injured party decide to continue with the performance of the contract, this will constitute an affirmation of the breach. Therefore, irrespectively of whether the breaching party is told that the contract is to remain valid or not, continuation of performance under the contract by the innocent party is sufficient to affirm it.
Following affirmation there is nothing in statute or common law to prevent the innocent party from claiming damages. The effect is that the amount of damages awarded will be nominal. Therefore, the innocent party cannot claim substantial damages resulting from the breach if they have effectively accepted it.
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